Back in October, I mentioned the website that gone viral: “Where’s the Note.com.” It allowed homeowners to easily request to see a copy of their mortgage note.

Yesterday, I noted that at least one Homeowner had made a “wheresthenote.com” Mortgage Note request, only to see Bank of America report the request as a dispute to the credit agencies, knocking 40 points off his FICO score. If these facts check out, that is a violation of the Fair Credit reporting act, and possibly other state and local laws.

This may turn out to be a smart tactic. Elected Senators and Congressmen seems to be bought lock stock and barrel by the banking lobby. And the State AGs seem to be harder to buy off. Congress does the bidding of their banking masters, so looking for any positive outcome there is futile. But ion the Fraudclosure issue, the state AGs have been dead on.

Here is the Wheresthenote announcement:

Update: Homeowners are sending us reports of banks responding with threats and intimidation.

It is your legal right to demand to see your original, signed mortgage note.

It is illegal for banks to negatively report to your credit file during the 60 day period after requesting your note simply because you made a request to see it.

Here is a stunning example of this: A state legislator in Arizona was sued for asking Colonial Savings about their Note. Michele Reagan is current on her mortgage, never missed a payment, was never even late.

Her and her husband were sued for even asking. Here is local TV station CBS 5 (KPHO):

“Arizona Rep. Michele Reagan, R-District 8, is better known for fighting for new laws, but now, she is speaking about her fight against a lawsuit.

Reagan is being sued by her mortgage company after she questioned who owned held the note on her home. “It’s really scary,” she said, “I think that this really needs to be brought to light that this is happening to people in Arizona.”

Reagan had wanted to find out she and her husband, David Gulino, could refinance their south Scottsdale home. “In doing research, I began to wonder if the lender even owned the note to my home,” she said. “So I sent them a letter and asked them and asked them several things. I want to know who owns my property. Am I paying the right person?”

Soon after, Colonial Savings filed a lawsuit in U.S. District Court against Reagan and her husband. The company says the couple is trying “to rescind their home loan,” or back out on the loan. “We’re not interested in walking,” Reagan said. “We’re not interested in saying we’re not going to pay. We just need a little help with the interest rate.”

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

It looks like this is another of those “legal rights” that we don’t really have. Calling the attorney general’s office, hiring a lawyer for $10,000, plus devoting almost full time to fighting the bank probably still isn’t going to get the 40 points restored to your credit score.

Certainly it is courteous and customer friendly to try to grant a request such as this. However, the borrower in all probability received a copy of their note at the close. Additionally, since some of this is paperless now, how does one see the actual physical on-paper note? Does a copy suffice?

*SNIP*
~~~

BR: The issue here is not to get as copy of the note, but to find out who actually owns the note, and if the transfers were done legally.

Before posting comments in the future, try to have event he sleightest clue about the issue at hand.

I’m sure the big banks have their thumbs on the FICO scales in many ways, they just got “caught” on this because they wanted the word to get out that they’d attach a penalty shot to anyone who exercised their right to see their note.

A few years ago very few gave a shit about these scores, now it’s a soap opera. I’ve heard these scores influence the costs of unrelated services – like insurance , hurt job applics. Apparently the banks have convinced other businesses that bad scores make you a bad person and a bad person obviously is a bad driver and unemployable!

“To protect myself and my family, I need to know who owns my mortgage. Within thirty days, I would like to know the name, address, and phone number of the bank or investor that owns my mortgage. Furthermore, in light of the recent allegations of foreclosure fraud, I demand to see the original mortgage note proving ownership over my home loan. If you fail to produce a mortgage note proving that you have a right to collect my mortgage payments, I will be forced to consider all options available to me to ensure that my family and my home are protected.”

It is not clear to me to what extent the consumer does have the right to know who owns their mortgage, or that the note is legally required to show the servicing company has the right to collect your mortgage payments – there is clearly debate on this, and collecting the payments is a different right than enforcing foreclosure. I point specifically to Curmudgeon’s post from yesterday, posted below.

Thus the problem is the SEIU letter took a very aggressive approach of threatening to pursue “all options” based on a right that sounds at least debatable. So its hard to see why this is not an indication of a dispute over the loan, which as Curmudgeon also points out appears to be a valid vredit concern.

——-
Repost of Curmudgeon:

The Curmudgeon Says:
December 14th, 2010 at 11:38 am
Some observations:

1) It has always been material to a credit evaluation of a borrower whether or not a debt is disputed; also material is the number of credit inquiries being made about the borrower.

2) “Demand for Presentment”–a common-law right of debtors to demand the creditor present evidence of the debt–was waived in every Fannie Mae/Freddie Mac conforming mortgage I ever closed. Meaning, no, you don’t necessarily have the right to know who owns your note. It’s my understanding that all states that still have some vestiges of the right remaining require it be waived in a conforming note and mortgage.

3) The chain of title that matters to the borrower is thus: The originator tells the borrower where and to whom to send the payments initially. It is in the body of the note. From there, if the originator transfers the right to receive payments, the originator tells the borrower to send the payments to a different entity and location. In turn, if that transferee then sells the right to receive payments, that transferee tells the borrower the new lender and location, and so on. Any idiot that would start sending payments to a new entity without getting a proper notice to do so from their existing lender would probably also be willing to buy the Brooklyn Bridge. And well, it should be sold to them.

“BR: The issue here is not to get as copy of the note, but to find out who actually owns the note, and if the transfers were done legally.”

Nonsense. The transfer of a note doesn’t have to be done in any particular way. Whoever has physical possession is legally considered to be its owner, unless there is evidence to the contrary, but it is most usually endorsed like a check.

Finding out who actually owns the note is not really important, either. The “actual” owner may be a Norwegian pension fund, but for the borrower’s purposes, it is the servicer that matters, since Norwegian pension funds rarely directly accept payments on American residential real estate mortgages. So long as the borrower is paying the right servicer (I can’t imagine that someone’s payments routinely just float out into space or something), i.e., the servicer her prior servicer told her to pay, then they’re fine, and evidence of their payments would be a defense to default if there were an issue in court.

This Arizona representative just wanted to get a mortgage mod. The mortgage company declined or acted too slowly. Since she is a politician, she used what politicians use best–political grandstanding to get her way.

these responses and actions from the banks (servicers) look more like mob tactics instead of a ‘customer focused’ business which is campaigning about taking the crisis and foreclosure problem seriously and doing everything possible to help keep their customers in their home.

This isn’t my area of expertise but what is the story with the not itself? Does the note necessarily have to be produced?

This question came up on one of the state attorney listservs recently, and a suggestion was made that this would probably be covered by the UCC (3-309) as adopted in my particular state. http://www.law.cornell.edu/ucc/3/3-309.html

Maybe this is splitting hairs, but I just haven’t heard anyone explain why the “original, signed mortgage note” has to be produced (although proving the terms and the right to enforce could be more of a challenge).

If bobabouey has text that is from the actual letter, then this is another case of people arguing a situation that doesn’t exist. As the facts stand, this congresswoman is a distressed borrower, and was seeking to pursue some form of negotiation with the bank, because future cash outflows required to pay the mortgage are expected to be greater than future funds and cash inflows to Ms Reagan.

Amazing to see all of the rants, when this situation doesn’t really justify railing against the banks or mortgage servicers. If Ms Reagan had sent a letter simply asking to show proof of custody for the note, and the bank responded with foreclosure proceedings or a lawsuit, then I might understand the outrage. Show me the examples of a person that is current on their mortgage making a pure request for info, and then I will be convinced there is a problem. Most of the examples I am seeing feature borrowers already underwater, delinquent, etc.

The 2 examples provided take a pretty aggressive posture, one threatening legal action. The other taking a strange path to ask for a loan mod.

Aren’t there examples of some homeowner out there simply asking: who holds the note?

I don’t see any problem at all with a homeowner knowing that information. And on the flip side, I’d bet that no investor, insurance company, hedge fund, or anyone else would give a hoot whether they held the note to Bob’s house on Main Street in Peroia, Illinois — and Bob knew that. All they want to know is whether Bob’s loan is perfoming.

It seems pretty clear to me that the reporting agencies are obligated to report the dispute as reported to them by the lender. You could also argue that the lender is obligated to report the borrower’s demand (the wording used in the “request” itself) as a dispute given the borrower’s threat to “pursue all options…”

Maybe BR could explain his thinking around how this is a violation of the fair credit reporting act?

The account is not in dispute, the payments are not in dispute, the mortgage id not in dispute, the note is not in dispute: THERE IS NO DISPUTE.

This was merely an inquiry to see where the note was. No one has challenged the validity of the mortgage obligation, or failed to pay — its merely an information request ; This is merely asking where the note is.

Reporting that to a credit agency is dubious, and may violate the law.

My quote came from the standard form generated by the SEIU sponsored website http://www.wheresthenote.com. I don’t have a problem with the idea of requesting that information, but given that Curmudgeon raises some very good points on the extent to which there is a right to that information based on waivers in the contracts, and the relevance of that note in terms of an obligation to pay the loan to the servicer (as opposed to foreclose), I think it was a little reckless of the SEIU to set up a form letter with that strong, essentially threatening language.

What fascinates me is there are still quite a few people in this country who are devout apologists for the indefensible. Stockholm Syndrome writ large? Must be industry insiders who have to drink the Kool Aide to justify one’s job and career as being a worthwhile endeavor.

“This was merely an inquiry to see where the note was. No one has challenged the validity of the mortgage obligation, or failed to pay — its merely an information request ; This is merely asking where the note is.”

Based on the SEIU / wheresthenote form, that is not true. It was not just “where is the note”, the exact language was: “If you fail to produce a mortgage note proving that you have a right to collect my mortgage payments, I will be forced to consider all options available to me to ensure that my family and my home are protected.”

You are a lawyer, read that language carefully.

If the banks legitimately believe that the requesting party does not have a right to the note or that providing that note is a requirement for them to have a right to collect payment, for the reasons explained by Curmudgeon, then there is now a dispute.

Yes, the letter is unclear as to what options will be pursued (although clearly it is a threat TO pursue options) but even that doesn’t matter. The “if you fail to” clause asserts that AFFIRMATIVE action by the lender (” produce a mortgage note proving that you have a right to collect my mortgage payments”) is required for the borrower to believe the servicing company has a “right to collect my mortgage payment.” I.e. the borrower is saying if you don’t do that, then I don’t believe you have a right to collect my mortgage payment. How is that not a dispute?

Even assuming that these “show me the note” form letters are aggressive enough to raise an issue as to whether they constitute a consumer dispute, FCRA requires the financial institution to report back to the consumer with the results of its internal investigation of the “disputed” matters after that 30 day period you reference. My question from yesterday is is that happening? Did that happen for SM?

Under FCRA a company can’t just report an account as in dispute after getting a customer letter and leave it in that status indefinitely without ever investigating the consumer’s issues. Conversely, if I were a borrower who received a satisfactory response from the institution I would immediately send a letter acknowledging receipt of their response and indicating that you are satisfied with their investigation results. Done, no basis for further reporting of dispute status to the CRAs. Common sense.

Why provide loaded background commentary and make what I read as a little political stump speech if you just want to know where your note is? Just ask where the freaking note is and leave it at that. It’s nobody’s business why you’re asking if you’re entitled to know. And I’m writing as someone who normally represents borrowers.

You can’t waive your right to know who has the right to receive payments on your note; in court, ownership of the note is a fundamental issue of standing, which is jurisidictional. If the right to sue is put in issue by a defendant, it must be decided and if that right cannot be established by the plaintiff then the case CANNOT proceed and will be dismissed. Period.

Banks make half the rules with the cooperation of legislatures and make UP the other half just because they feel like it.

I don’t have a problem with calling the legislator’s letter a dispute; I do have a major problem with lowering a FICO score where not a single payment is untimely. The whole FICO thing is disgraceful; there is zero transparency in it and it’s clearly of critical importance to consumers. And please, don’t start preaching about Fair-Isaac’s intellectual property rights.

The technical point under discussion — which clearly went over your head — was the decision of lenders to treat the SEIU “show me the note” letters submitted by laypersons (i.e., non-lawyers) as “disputes” resulting in reports to the Credit Reporting Agencies that in some cases resulted in reduced FICO scores.

My use of the term “aggressive” was an observation about the tone and content of the web site’s form letters and how it might be reasonably interpreted by financial institutions’ legal departments. So, to sum up, you completely missed the point and clearly didn’t understand a pretty decent technical discussion in the slightest. But thanks for playing.

It didn’t go over my head, the “show me the note” letter was an enquiry and it mentions failure to provide the note may end in dispute.
Reasonably interpreted by bankers? there is nothing reasonable about bankers these days, people who tried to be reasonable, didn’t ask for the note and chose to talk directly to the banks were told they would get modifications, only to find out that banks had received government subsidies to do so but were still foreclosing.
Excuse my failure to understand a decent technical discussion when it comes to crooks.

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